Why Etisalat’s move to sue MTN is a struggle for survival

Etisalat has sued South African-based telecoms giant, MTN, following the mobile company’s acquisition of the last surviving Code Division Multiple Access (CDMA) operator, Visafone Communications.

Etisalat’s decision to file a legal suit against MTN came against the backdrop of maintaining competition in the retail data service space since MTN’s acquisition of Visafone’s 800MHz spectrum affords her the opportunity to launch fourth generation long term evolution (4GLTE) services, while other telecommunication companies lag behind in this new development.

Etisalat’s move to challenge MTN’s perceived dominance in the telecommunications sector is justified. This is not the first time Etisalat and MTN would be at loggerheads for the Nigerian retail space “dominated” by MTN with a 44 percent market share of the mobile voice market as at 2013.

MTN has a subscriber base of 62.5 million compared to Etisalat with just 23 million subscribers. MTN’s acquisition of Visafone puts her in an enviable postion alongside Globacom, the only other operator that has a licence on the 700 MHz spectrum, giving it the ability to do LTE which could see most etisalat subscribers opt for the new services offered by Globacom and MTN.

Etisalat seeks not only to consolidate its position in Nigeria’s retail space but also improve its earnings as evident in the various promotions and loyalty programmes the telecommunication company has embarked on in a bid to ward off competition from MTN and Globacom.

In July last year, Etisalat accused MTN of breaching the norm amongst telecommunications operators following MTN’s Family and Friends tariff which restricted outgoing traffic to smaller operators by making on-net tariff price lower, making off-net calls unattractive. It is also apparent that Etisalat is aggrieved about what could suggest “favoritism” given to MTN by the NCC following the commission’s decision not to make bid for Visafone’s spectrum open to other telecommunications company.

With intense pressure on MTN to settle the $3.9 billion fine imposed by the NCC, the new saga with Etisalat among other court cases shows the Johannesburg based MTN has lot to contend with in its operations across other countries.

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